Fed Powell calms interest rate fears, ECB minutes due

S&P500 => The index rises to 4400
Costco => The stock trades 2% higher this week
EUR/GBP => The pair falls to a 2-year low

S&P rises after Powell hints to rate hikes

The S&P500 rebounded on Wednesday, boosted by an upbeat sounding Fed Chair Powell and by hope of peace talks, after Russia said that it was interested in negotiating with Ukraine again, even as the military attacks continue.

Fed Chair Powell signalled that the Fed would press ahead with a rate hike of 25 basis points in March saying that the US economy was strong enough to absorb the rate hikes to bring inflation lower.
His encouraging words, and the fact that a 50-basis point rate hike was taken off the table lifted the market mood, boosting demand for stocks.

Strong ADP payroll data also helped lift the USD. Today the futures are rising as attention turns to US jobless claims, ISM non-manufacturing data and another testimony by Fed Powell before Congress.

US ISM Manufacturing PMI

US ADP Payrolls

Actual: 58.6 (1)

Expected: 388k (687k)

Previous: 57.6

Previous: -301k

Fed Powell calms interest rate fears, ECB minutes due chart

Where next for S&P 500?

The S&P500 is pushing higher for a second day and is set to test resistance at 4400, a level which has capped gains since mid-February.

The Bullish crossover on the MACD is keeping buyer’s hopeful of further upside. However, buyers will need to push beyond 4400 in order to form a higher high and expose the falling trendline support at 4465 ahead of 4490 the February 16 high above here the bias turns bullish.

Failure to close over 4400 could see the bearish bias dominate reflected by the 50 sma crossing below the 100 sma. Support can be seen at 4270 the January 28 low, opening the doors to 4220. 

Costco Q2 earnings preview

Costco is due to release Q2 earnings after the market close today.

Costco has seen a slowing of growth in both revenue and sales across recent quarters as the COVID boost fades. That said, growth does still remain reasonably strong, and the retailer is also increasing spending on new stores md projects to boost growth further.

Expectations are for comparable sales to rise 11.8% in the quarter, thanks to a strong performance in the US and Canada. Revenue is expected to rise to $51.3 billion with EPS of $2.73. The share price has rallied 58% over the past 12 months, well ahead of the S&P 500 which trades just 10% higher.

EUR/GBP fall to a 2-year low

EUR/GBP Is falling for a fourth consecutive day and trades at a two-year low. 

The pair dropped 0.65% yesterday despite eurozone inflation soaring to a record high in February. Energy prices were a key drive, pushing prices higher, but with energy prices still rallying, inflation shows no signs of slowing, piling pressure on the ECB to act to raise interest rates at a time when concerns are growing over future growth in the region.

Today concerns over stagflation are pulling the euro lower attention turns to the release of the minutes from the February ECB meeting and also the composite PMIs from both the eurozone and the UK, although these are final readings so not usually as market moving as the initial reading. 


German inflation

EZ Composite PMI

UK Composite PMI

Actual: 5.8% (0.7%)

Expected: 55.8 (3.5)

Expected: 60.2 (6)

Previous: 5.1%

Previous: 52.3

Previous: 54.2


Support for the pair can be seen at 0.8250 (falling trendline support) and 0.82 (round number)

Resistance for the pair can be seen at 0.83 (round number) and 0.8370 (50 sma)


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